87.182. Deferred retirement option plan, established, may include self-directed program--procedures--election to stop participation, how--death, effect of--interest earned.
Deferred retirement option plan, established, may includeself-directed program--procedures--election to stop participation,how--death, effect of--interest earned.
87.182. 1. The board may develop and establish a deferred retirementplan program (DROP) which may include a self-directed program, in whichmembers eligible for retirement may participate. The DROP program shall bedesigned to allow members with at least twenty years of creditable servicewho have achieved eligibility for retirement and receipt of a serviceretirement allowance to continue active employment and defer receipt of theretirement allowance for a period not to exceed five years. Any member whohas at least twenty years of creditable service may elect in writing beforeretirement to participate in the DROP program. A member electing toparticipate in the DROP program shall continue in active employment andshall not receive any direct retirement allowance payments during the timeof participation. Upon the start of participation in the DROP program, themember shall make the contributions as provided in section 87.295. Nocontribution shall be required by the city. During the period ofparticipation in the DROP program, the amount that the member would havereceived as a service retirement allowance shall be deposited monthly inthe member's DROP account which shall be established in his or her name bythe board. Service earned during the period of participation in the DROPprogram shall not be creditable service and shall not be counted indetermination of any service retirement allowance.
2. If a member who has elected to participate in the DROP programchooses to stop participation in the DROP program, he or she shall notifythe board in writing. Upon receipt of notice of a member's desire to endparticipation in the DROP program, the board shall return the member tonon-DROP participation status and both the member and the city shall makethe contributions required by sections 87.120 to 87.370. Service renderedafter restoration of the member to non-DROP participation status shall becounted as creditable service. No member ending participation in the DROPprogram and returning to non-DROP participation status shall make anywithdrawal from his or her DROP account until after termination ofemployment. If after return to non-DROP participation status, a memberretires, the member's retirement allowance shall be computed on thecombination of the member's pre-DROP service retirement allowance plus anadditional allowance earned by a member after returning to non-DROPparticipation status. Post-DROP participation years of service will be theonly years used in computing the additional allowance; however total yearsof creditable service will be used to determine the appropriate level ofadditional allowance, two percent or five percent, for each year ofpost-DROP participation service. Upon retirement the member shall receiveadditional benefits as provided under the provisions of sections 87.120 to87.371 plus the amount which has accumulated in his or her DROP account.The amount in the member's DROP account shall be payable, at the member'soption, either as a lump sum payment or as a periodic payment calculatedaccording to a deferred payment plan established by the board.
3. A member who terminates employment after participation in the DROPprogram may withdraw any amount in his or her DROP account in a lump sum oraccording to a deferred payment plan established by the board at hisoption. If the member is eligible to receive a service retirementallowance, benefit payment shall begin at the time specified in sections87.120 to 87.370.
4. If a member dies prior to termination of employment whileparticipating in the DROP program, the funds in his or her DROP accountshall be payable to the member's designated beneficiary under either of thefollowing options:
(1) A lump sum payment equal to the amount in the member's DROPaccount shall be paid to the beneficiary or the member's estate. Thebenefits for a beneficiary provided under the provisions of sections 87.120to 87.370 shall be based on the member's compensation and creditableservice prior to the member's election to participate in the DROP program;or
(2) The beneficiary shall waive any right, claim or interest in themember's DROP account and any benefits payable to the beneficiary under theprovisions of sections 87.120 to 87.370 shall be calculated as if themember had continued as an employee and had not elected to participate inthe DROP program. Any funds in a DROP account which has been waived asprovided in this subdivision shall become funds of the system.
5. If a member who has elected to participate in the DROP programsubsequently applies for and receives benefits for an accidental disabilityretirement allowance under the provisions of section 87.205, the membershall forfeit all rights, claims or interest in his or her DROP account andthe member's benefits shall be calculated as if the member had continued inemployment and had not elected to participate in the DROP program. Anyfunds in a DROP account which has been forfeited as provided in thissubsection shall become funds of the system.
6. Except in the case of any self-directed program, a member's DROPaccount shall earn interest equal to the percentage rate of return of thesystem's investment portfolio as certified annually by the system's actuaryin the yearly evaluation report. Except in the case of any self-directedprogram, the interest shall be credited annually to the member's accountbeginning with the start of the second fiscal year of participation.
7. No member may elect to participate in the DROP program more thanonce.
(L. 1993 H.B. 259 § 87.180, A.L. 1995 H.B. 260, et al. merged with S.B. 404, A.L. 2003 S.B. 456)Effective 5-15-03